New York State Flower GrowersINCORPORATED

BULLETIN 109 Secretary, Harold B. Brookins, Orchard Park, N. Y. SEPTEMBER 1954

*What's Wrong With Flowers?Sales in the floral industry are badly wilted. One trouble: Inability of floriststo move in on mass market. U. S. is backing studies to find what can be done.

In a day when more and more so-called luxuryproducts are making the transition to the mass market,some are finding the crossing very bumpy. Merchandisers of off-beat wares just can't find the groovesometimes, even if their product is something everybody likes. Yet chances are they will have to crossover if they are to keep going. Take the case of flowers.

In a Word

Most of the floral industry would agree with thesumming up of one wholesale florist: Business islousy." The biggest wholesaler in the country reportsthat in the last two months five wholesale concerns havebegged him to buy them out to keep them from goingbroke.

The situation is so rough that Uncle Sam has takena hand. Right now two big research programs are inthe works, on money voted by Congress this summer.One involves four universities in the Northeast--Massachusetts, Penn State, Cornell, and Rutgers. Thefour are wprking out surveys to measure consumerattitudes and buying behavior, setting up tests for newmerchandising techniques, studying present methods.The other project involves government experimentalstations in Alabama, Texas, Tennessee, Georgia, andPuerto Rico. The aim here, primarily, is to ferretout the potential market for southern flowers.

Leaders in the industry hope these long-term studies may come up with some answers. They believethe whole floral business is on the verge of a revival--if it will only heed the signs of the times.

Why So Hard

When you have a product that is universally acceptable, why is it so hard to sell? The trade has twomain answers:

1. Florists are, in a sense, the victims ofscientific advances.

2. In their enthusiasm for their product, theyare often blind to the need for merchandising.

Science has hit the florist in two directions. Thewholesaler who found business lousy gave as his unhesitating explanation, "Nobody's dying." The slowed-up death rate makes a big difference to an industry thatgets nearly 85% of its total $1 1/4-billion yearly retail business from funerals and weddings. Worse still,funeral notices in newspapers increasingly carry themessage, "please omit flowers."

Science has made the headache more acute by stepping up the productivity of flower growers. Scientificplanting, better methods of cutting and storing meanmore flowers to sell. Wholesalers complain that growers are swamping the market.

Worse Than That

But this is not the worst difficulty. M. TrumanFossum, agricultural economist, feels that the majorhandicap of the flower industry is not overproduction,but rather a failure to arouse latent demands. In other

words, it's not doing a selling job. The carriage trade--to which the flower business traditionally caters--issaturated. But the industry hasn't begun to tap thesales potential of the everyday customer.

The truth of the matter is that the florist is a betteraesthete than he is a merchandiser. He is apt to sitback and wait for the weddings and the funerals thatgive him a chance to use his artistic talents--whilehe lets the occasional customer slip through his fingers.

Growers can be as reluctant as the retailers to goafter the mass market. "Why should the price of rosesbe determined by the length of the stem?" Fossumasks. "The market for long-stemmed roses is negligible yet growers strive to produce long stems andseem to forget it's the bud at the top that the customer wants."

Competitors

If the florists won't tap the mass market, the experts warn, other outlets will. Increasingly, cut flowersare turning up in supermarkets. Variety stores anddepartment stores are taking a crack at them. Theserelatively new outlets still account for only a smallpart of the total business, but their share is growing.It's estimated that supermarkets, variety stores, anddepartment stores did 5% of the total floral businessin 1952, against 2. 5% in 1945.

This trend is particularly strong in the South andthe West. And in the East, food chains such as PennFruit Co. in Philadelphia and some of the Grand Unionstores are now going along with it. Statistics on howwell the flowers pay off are skimpy; some food storessimply lump flower sales in with ' produce," have nocheck on whether flowers area profitable item. Somestores feel that offering flowers is something of a frill,one more step on the road to one- stop shopping. Othersfeel there's a definite profit in flowers, provided thestores stick to flowers that are in season.

The florists have fought this trend tooth and nail.In Chicago they tried to push through a regulation thatto handle flowers a shop must have a refrigerator designed just for that purpose. In Louisiana they backedlegislation--which didn't go through--barring the saleof flowers in food stores because flowers treated withinsecticides might contaminate foods.

Other Side

Supermarkets argue that they aren't competingwith florists; the people who buy there wouldn't buyat all if they had to go to a florist.

Some enterprising florists have countered withsupermarkets of their own. One such is My Florist,Inc. , which has set up flower supers in connectionwith department stores (Business Week--April 18,1953, page 126). Others have made a bold bid for themass market. Podesta-in-Baldocchi in San Franciscowill sell anything from a nickel's worth of flowers to$500 worth. Tommy Luke, in Portland, made a killingone Mother's Day when he handled 700 orchids at a

Con't. on page 2

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What's Wrong With Flowers?

special price of $1. 95.

Inside and Out

Besides the ailments that are peculiar to the industry, florists--both wholesale and retail--sufferfrom more common complaints. Competition from thesupermarkets is still a small factor but competitionwithin the industry is getting fiercer. Since the early1940's, wholesalers have mushroomed, particularlyin the South Truckers who buy from growers and makethe daily rounds of the retail shops have cut into thewholesaler's trade. Growers who find that the regularwholesaler can't get rid of his stock sell direct to theretailer.

What's more, the do-it-yourself gardener has probably hurt flower sales some. As more and more peoplepush out into the suburbs, a hugh new market is building up for plants--and this does not help the cut-flowerbusiness. Jackson &. Perkins, big rose grower, for

instance, sold all its plants through wholesalers prewar; today it sells 60% direct to the consumer.

Hope

There are some signs that give the industry leadershope that the tide will turn. Growers are learning theefficiencies that can come from specialization. InCalifornia and Florida this trend has led to a new breedof flower middleman. These are handlers who gatherfrom the growers the flowers of the area, ship to thewholesalers across the country.

But the awakening comes slowly. For a year anda half the Society of American Florists has tried toget the trade to pledge $600, 000 toward a $1-millionnationwide flower promotion. So far the society hasn'tgot the money.

Business Week

September 4, 1954

* By permission of Business Week Magazine

Florists' Hail Association

of America*The Florists' Hail Association is an all florist in

surance company, being completely owned and operatedby florists.

Of prime concern to prospective members of theAssociation is the fact that this is a non-assessmentmutual company. Regardless of the loss circumstances,members of the Association cannot be assessed. Inthe State of New York, as in most states, those Mutualcompanies which can show the same financial strengthwhich is required of Stock companies can issue policieswhich are non-assessable. Being a mutual company,however, means that they do pay back to the membersthe profits of the company in the form of policy dividends. The current dividend rate is 15%. It has beenas high as 50%, these being paid during the depressionyears of the early 1930's. Never has the Associationpaid less than 15%.

The greenhouse policy is an outstanding exampleof tailoring an insurance contract to fit a particularneed, and it is without equal in its field. Followingare its more important features.

l--Covers all greenhouses including glass, sashbars, steel framing, heating pipes, fixed benches andall other items above the ground level which are permanent fixtures of the greenhouses with the exceptionof the growing crops.

2--The hazards covered are Windstorm, Cyclone,Tornado, Hurricane, Hail, Snow, Explosion, (otherthan steam boiler), Aircraft, Vehicle, Riot, Riot attending a strike, and Civil Commotion. For a slight addi -tional premium charge the policy can be written toinclude lightning on stacks.

3--Loss settlements are made on a replacementcost basis. There are no deductions for depreciation,co-insurance reductions, glass clause limitations,

pro-rata distributions, or other "if •s" in the policy.So long as the assured has an amount of insurancesufficient to cover the cost of repair he is covered100%.

To give you an idea of costs to insure, let us usefor example a range covering 10, 000 sq. ft. of groundarea. We could insure it for any one of five valuesdepending on the desires of the owner, at the followingone or three year costs.

M'T OF INS. 1 yr. gr. est. 3 yr. gr. a

$26, 600. 00 $50. 54 $126.3521, 300.00 48.99 122.48

13, 300. 00 45.22 113.05

8, 900. 00 35. 60 89. 00

6, 700. 00 30.82 77.05

The above gross costs would of course be reduced bythe dividends paid during the period of the policy.

The Association also writes a complete line of FireInsurance. They can insure any property owned by aflorist including his business, personal, and investmentproperty. They use the standard fire policy contractrequired by law, so that the policy does not differ fromother companies. However, they are permitted by theState Insurance Department to deviate all rates by 15%.Thus whatever the published rate, the Florists' HailAssociation rate is 15% less. The deviation plus thedividend payment gives a total savings of 30% overStock Company costs. The savings over other Mutualcompanies would depend on their dividend rate.

* This article is from a letter from Guy L. Hudson,M. D. 14, Newburgh, New York, representing theFlorists' Hail Association of America. For furtherinformation concerning greenhouse insurance pleasecontact Mr. Hudson directly.